India consumer firms gear up to cash in on a sizzling summer
Indian consumer goods companies such as makers of cooling systems, beverages and ice cream are attempting to capitalise on a hotter-than-usual summer season by cranking up output, launching new products and ramping up spending on marketing.
The world's most populous nation expects 10 to 20 heatwave days, which it describes as temperatures hitting at least 40 degree Celsius in the plains, from April through June this year, versus the normal four to eight days. Already temperatures have crossed 40 degrees in a few cities in the western Maharashtra and Gujarat states.
The searing heat is why appliances maker Blue Star has launched dozens of new home airconditioner products as it targets a 25 per cent jump in revenue from that business this summer versus just a 5 per cent increase last year, according to its Managing Director B. Thiagarajan.
And Us-based ice cream brand Baskin Robbins has launched 20 new products in India ahead of the summer season.
“An unusually hot year will significantly impact the sector and uplift consumer discretionary companies' demand for selling airconditioners, fans, fridges, etc,” said Akshay Mokashe, senior research analyst at Axis Securities, adding that they will report robust growth numbers for the first quarter of the current fiscal year.
Cooling systems providers are one of the main beneficiaries of summer, with the season contributing up to 60 per cent of their annual revenue.
While the industry has previously estimated that less than 10 per cent of Indian households have airconditioners, the hotter summer season and new product launches are expected to lift that number. “People generally plan for airconditioner purchases a couple of months in advance. But harsher summer expectations have triggered fence-sitters also into buying,” said Deepak Jasani, head of retail research at HDFC Securities.
Roughly nine in 10 customers this year are first-time buyers as they long for airconditioners after getting used to temperature-controlled spaces in offices, banks and theaters, Blue Star's Thiagarajan told Reuters. G. Hariharan is one of them.
The software engineer from Thiruvananthapuram city in the southern state of Kerala bought his family of four their first airconditioner last month.
“We have always muscled through the hot months, but this year, it is too hot, and it has become too difficult to sleep,” Hariharan said. “Even two fans are not enough.”
Summer bump
Ceiling fans are India's go-to during summer, while airconditioners are still considered a luxury for its majority. Companies are stretching their production and distribution capabilities to meet the increase in demand.
Graviss Foods, which runs Baskin Robbins stores in India, is ensuring its “factory is running at full throttle” after opening more distribution centres to reach retailers and distributors faster, said CEO Mohit Khattar. Advertising budgets are also up this summer, partly because slots on the popular Indian Premier League cricket games have become more expensive as they coincide with India's massive general elections.
Blue Star is nearly tripling its summer advertising budget to Rs400 million, while Baskin Robbins' marketing budget is being raised by up to a quarter as it aims to reach twice the number of people through TV and online advertising.
It is not just manufacturers that are cashing in on the summer, but delivery and other services companies too.
Grocery delivery app Swiggy has seen a 28 per cent surge in demand for cold drinks and juices, along with a 43 per cent increase in orders for ice cream since the summer began, according to its spokesperson, while orders for instant drink mixes and ice cubes have shot up.